LONDON, Aug 11 (Reuters) - A sell-off in heavyweight basic resources stocks prompted a third day of losses for European shares on Friday, posting their worst week this year amid a ramp-up of tensions between the United States and North Korea.

Volatility jumped and the pan-European STOXX 600 fell 1.1 percent, taking weekly losses to 2.8 percent, its worst since early November 2016.

The losses have been triggered by a standoff between Washington and Pyongyang, as the war of words between the two intensified.

"Investors have been anticipating that we are due a correction of some sort," said Paul Harper, European equity strategist at DNB.

"To some extent they have been expecting something and have just been looking for the catalyst. But if investors are positioned for this already, you are going to need something more to give it significant legs as some might be tempted to buy the dip," he added.

The VSTOXX, the main European gauge of equity investor anxiety, jumped to a near four-month high, though it remained close to historically depressed levels.

"It's a big move in the context of what we've seen in the course of this year, but in a bigger picture perspective the levels are still relatively moderate," said Harper.

Banks also fell 1.6 percent, with the sector posting its worst week in nine months.

Drugmaker Galapagos was the sole bright spot, up 4.8 percent as brokers upgraded their view on the stock which also outperformed on Thursday after a successful drug trial.

UK mid-cap Dixons Carphone was the worst-performing, falling more than 7 percent after a top-rated Exane BNP Paribas analyst cut the retailer by two notches to "underperform", citing concerns about its mobile business.

With most companies having reported second-quarter earnings, a divergence was increasingly visible between euro zone corporates, whose earnings are dented by a stronger euro, and the broader pan-European index.

"Results have been fairly OK, but the reaction to the results has been on the soft side ... which perhaps suggests investors are increasingly nervous that valuations are getting to unsustainable levels," said DNB's Harper.